East Bay Ray knows firsthand the perils of failing to come to clear agreement upon the contractual details of the music business.

As the guitarist for the punk band Dead Kennedys, East Bay Ray has negotiated record deals, co-founded a record label, successfully sued band mate Jello Biafra over a royalties dispute, and devised creative distribution methods, including selling records out of the trunk of his car. After the release of an ambient record last year, he's currently back in the recording studio, working on a rock 'n'roll album with his new band, East Bay Ray and the Killer Smiles, which will be released this fall. We talked with East Bay Ray about the business of running a band.

Did the Dead Kennedys have a contract with each other related to how you'd divide up royalties and so forth?

With royalties, there are two sources: Record sales and publishing, for writing the song. Usually musicians don't have a formal contract about these things and it can be difficult to bring it up in the beginning. But it's a good idea to discuss this stuff. Our original agreement was oral and then eventually we put it into writing. There were a number of years in between.

In a band, technically, if a musician hires everyone to play the music, it's not a partnership. But if you collaborate, then it's default partnership — whether you recognize it or not, the law recognizes it. But how you divide stuff up should be discussed. The thing is, if someone contributes to a song, you should get a piece of it.

So for example, if someone, in one of the rehearsals, adds a part, then they get a piece of the song. That's how the Dead Kennedys did it. I got the idea from Los Lobos and the Talking Heads. The Talking Heads would divide one-third of the income of the songwriting to all the band members because the band added parts in rehearsal, and then whoever brought in the initial song idea would split the other two-thirds. Los Lobos does the same, but it's 25 and 75 percent, I believe.

But you still had problems with royalties ...

You're probably familiar with our court case [between lead singer Jello Biafra, who withheld royalties from the rest of the band] and one of the issues there was Biafra thought he did everything, and the truth is that it was a collaboration.

When you're dealing with a person who can skim royalties from their band mates and have no qualms about it, nothing is going to protect you. If someone has plans to exploit other people and promote themselves and their image and not deal in good faith, it doesn't matter whether the contract is oral or written. But having something in writing is good if there's an honest misunderstanding or if people's recollections differ, which happens a lot.

How have you changed your approach since that experience?

Now I don't trust people as much, they have to prove themselves first. And with this new project, I talk to the guys. I discuss things and send an e-mail out that says, "This reflects what we discussed" so that everyone has something in writing. This is to make it fair, so that everyone has it in writing so there are no disagreements down the line. Or, if someone gets delusional, then all of this is in writing. [Laughs.]

What advice have you given to other bands or musicians?

The band Cake from Sacramento, before they signed to a major label, we went to lunch. They asked me to look at the deal before they went on and signed it. It was a basic offer. I forget the details, but overall it was good. There were some things I told them to change and to look for, like packaging deductions. Back when CDs were popular, the label would give you 10 to 12 percent in royalties, but 25 percent of that goes for packaging, so you only really get a fraction of it. But that's negotiable.

I told Cake to get an escape clause so that if the record label doesn't produce, then you can get out. That's a bad situation for a band to be in, where the label owns the rights to your music but they're not doing anything with it.

How did you learn this stuff?

I got a book when the Dead Kennedys first started called This Business of Music. It has sample contracts. It's not rocket science. If you can play guitar or the piano, you can read a book and look at contracts. With contracts, there are basically eight or nine points to look at — how long the contract is going to be, how much music you give them, stuff like that.

What other advice do you have for emerging bands?

One thing about a band is that you have to look at it like it's opera. It's about characters, costumes, and opera. Look at all of the great bands — the Beatles, Elvis, the Sex Pistols — and it's costumes, characters, and music.

And there are three things that keep a band together and if you get two out of those three things, you'll stay together. Those things are money, music, and friendship. If you have three out of three, then you tend to end up being great, like U2. But if you get two out of three — if you like the music and the money you'll stay with it; if you like the music and the people you're with, but you're not making any money, you'll stay with it. But if you only have one. ...

The other thing I see is bands that were starting out, they have one person pick up other people to go to practice. If you are babysitting people, it's not right. When the band gets successful, it just becomes more weight to pull, and people need to pull their own weight. What people don't realize is the hard work involved. People need to pull their own weight from get-go. That was true of the Dead Kennedys. Everyone was responsible and had a good work ethic.

You're known for some creative distribution methods back in the day. What suggestions do you have for that today?

Back when we were starting, there was a punk rock scene here. LA had a scene. So I financed our first single and Ted, the drummer, and I sold it out of the back of our cars. We sold 6,000 ourselves, which is very good. And we put them on consignment at the record stores. You can't do that much anymore because iTunes has killed the independent record store. But it is possible to have a corporate framework and still do that. A friend does poetry and she had a book published and she lives in Fresno. The local Barnes & Noble got a couple of her books and had a signing and they advertised it in local papers. So that was done outside of the corporate inventory, and that's a good model because with iTunes and the Internet, the brick-and-mortar is disappearing, which is unfortunate because I still like café society. But Amoeba still does that and I think Rasputin does, too.

How did you get your first record deal?

A guy in England wanted us to play in England. But he couldn't get us a show. He said the clubs don't want to book you on a single, but what if I find you money to do a LP?

He asked around London and Iain McNay from Cherry Red Records put up an advance to record Fresh Fruit for Rotting Vegetables. We put more than half of it toward the record and we took less than half for ourselves, and we thought that'd be the last of the income from the recording that we'd see.

That was a traditional deal — McNay owns the master forever, but he was a good promoter and the record was a big success in England. The band owns the publishing rights at this point as a partnership. We went to P&D deals with other labels, which are production and distribution deals, where the label gives you the money to manufacture and distribute the record, but we still own the master from the beginning.

Because McNay still owns the master to Fresh Fruit, he probably makes the same amount of money as we do, but I don't regret it because he took the risk and he was good at promotion. We did a tour with that record and then we started making a living at it.

What was it like to suddenly make money with music?

At the time, I was painting apartments. Me and another guy were partners and we were basically cleaning up apartments after people moved out. We were setting our own hours so I was able to work it in around the band. Music is an up-and-down business, so after we started making money, I spent the same as I was spending before. Some of the others spent it all and the next year, their income went down. So people react differently. But the music industry is up and down, so it's best not to do that.

I have a question from a friend. Now that Jerry Brown is running for governor again, will there be a remake of California Uber Alles?

Wow. Maybe.

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